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Debt Expert Says Iceland Shouldn’t Accept IMF Loans

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Debt Expert Says Iceland Shouldn’t Accept IMF Loans

March 15, 2010 11:24Updated: January 30, 2014 20:16

Alex Jurshevski, an expert in the debt problems of nations, advised Icelandic authorities not to accept further loans from the International Monetary Fund in an interview on RÚV’s political chat program Silfur Egils yesterday.

Photo by Páll Stefánsson.

Jurshevski claimed that chaos reigned in Iceland and criticized authorities for not handling the situation of Iceland’s debt to other states professionally. He said it had been a costly mistake to agree to repay the Icesave debt, ruv.is reports.

Then Jurshevski warned Icelandic authorities against accepting further loans from the IMF as they would only be used to pay out glacier bonds.

He argued that the interest payments from these loans would be too much for the Icelandic nation to handle and would lead to further cutbacks in the public sector.

Iceland’s Minister of Economic Affairs Gylfi Magnússon does not agree with Jurshevski, stating that Iceland’s debts are average compared to other Western states. He reasoned it is necessary to have access to foreign loan capital as debts haven’t been repaid.

Not to accept loans from the IMF is the “stupidest idea” he has heard in a long time, Magnússon said, because, along with the Icesave loans, they are the most advantageous loans Iceland has been offered.

The minister called it “preposterous nonsense” to reject the IMF loans because if so, Iceland can’t afford to pay its debts.

Magnússon said it is only half the truth to say that the IMF loans will be used to pay out glacier bonds.

Foreigners no longer have glacier bonds in Iceland but claims in ISK, a couple of hundred billion. They are bound to take them out of the country at some point.

However, in all likelihood, others are prepared to buy those claims at some point in the future, the minister concluded.

Click here to watch the interview with Jurshevski and here to read more about Iceland and the IMF.